A former US Nazi commander could be extradited from the US to stand trial for his alleged war crimes following a ruling from Germany's highest criminal court.

Michael Karkoc, 95, from Minnesota, could face prosecution after the Federal Court of Justice ruled that his position as commander of the SS-led Ukrainian Self Defence Legion made him the "holder of a German office".

This gives Germany the legal right to prosecute him even though he is not German, even though his alleged crimes were against non-Germans and were not in Germany.

His alleged crimes include commanding a unit accused of burning villages filled with women and children, a story which the Associated Press exclusively uncovered and that initially prompted court proceedings.

The court decision has been hailed as a "big step forward" by Thomas Will, deputy head of the special federal prosecutors' office that investigates Nazi crimes, who handled the initial case in Germany.

He concluded in his own investigation that there was enough evidence to pursue murder charges against Karkoc, who denies the allegations against him.

The federal court referred the case to Munich prosecutors, who will now examine the evidence again to determine whether to charge Karkoc and attempt to have him extradited from the US.

The AP report also stated thast Karkoc lied to American immigration officials when he originally entered the US a few years after World War II.

AP's investigation said Karkoc ordered his men to attack a Polish village killing dozens of civilians in the process, contradicting his family's claims that he was never at the scene of the 1944 bloodshed.